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13 Group Seca Hdfc Credit Cards

13 Group Seca Hdfc Credit Cards

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Sections

  • Project Title: Creation of a Marketing Plan
  • Product: HDFC Credit Card
  • i) Introduction
  • ii) Defining the product and Competitor
  • iii) Analysis of category
  • 1.Aggregate market factors
  • GROWTH:
  • Stages in Product life cycle:
  • Seasonality:
  • Profits:
  • Category Factors
  • Threat of new entrants:
  • Bargaining power of buyers:
  • Bargaining power of suppliers:
  • Pressures from substitutes:
  • Current rivalry in category:
  • 3. Environment Factors
  • a) Macro Environment:
  • 1. Technological:
  • 2. Political:
  • 3. Economic:
  • 4. Social:
  • a) Festivals and Religious occasions
  • 5. Legal:
  • b. Micro Environment:
  • c. Internal Environment:
  • Scanning of Market Environment
  • iii) Company and Competitor Analysis
  • Product Features Matrix
  • Gold Credit Card Features & Benefits
  • 2. Objectives
  • 3. Strategies
  • Marketing Mix
  • Profits
  • Value Chain
  • For credit card industry, value chain can be described as follows: -
  • Differential Advantage for each company in terms of
  • Expected future strategies
  • GAP ANALYSIS
  • iv) Customer Analysis
  • 1.) Segmentation
  • 2) Consumer Behavior
  • 3) Targeting
  • 4) Positioning
  • 5) Assumptions in planning process
  • 1. Market Potential
  • 2. Forecast Assumptions
  • Section 2
  • Objectives
  • Objectives:
  • Corporate Objectives
  • Divisional Objectives
  • Marketing objectives
  • Volumes & Profits
  • Time frame
  • Section 3
  • Strategy - Product
  • Customer Targets
  • Competitor Targets
  • Product/service features
  • Core Strategy
  • Value proposition
  • Product Positioning
  • Section 4
  • Integrated Marketing Communications Programmes
  • Pricing Strategy
  • Channel Strategy
  • Customer Management Strategy
  • Research
  • Section 5
  • Controls
  • Financial Budgets
  • Marketing Metrics

Project Title: Creation of a Marketing Plan

Product: HDFC Credit Card

Under the guidance of Professor Dr. Pingali Venugopal

Team: Group - 13 S. No. 1 2 3 4 Name Ankit Arora Prashant Sharma Subhangkar Banik Sumit Kejriwal Roll No. G10009 G10038 G10052 G10054

Project Report Progress: S.No.

1. 2. 3. 4. 5. 6.

Details Situation Analysis Objectives Product Strategy Marketing Programme Strategy Financials and Contingency Plans Final Report

Submission Date July 31, 2010 Sept 05, 2010 Sept 05, 2010 Sept 05, 2010 Sept 05, 2010 Sept 05, 2010

2

Contents
Project Title: Creation of a Marketing Plan.................1
Product: HDFC Credit Card.........................................................................1

Under the guidance of...............................................1 Professor Dr. Pingali Venugopal.................................1 Contents ...................................................................3 Section 1...................................................................6 Situation Analysis......................................................6
i) Introduction.............................................................................................7 ii) Defining the product and Competitor.....................................................7 iii) Analysis of category............................................................................13 1. Aggregate market factors.................................................................13 GROWTH:...............................................................................................15 Stages in Product life cycle:..................................................................15 Seasonality:...........................................................................................16 Profits:...................................................................................................16 Category Factors...................................................................................17 Threat of new entrants:.........................................................................17 Bargaining power of buyers:.................................................................17 Bargaining power of suppliers:..............................................................18 Pressures from substitutes:...................................................................18 Current rivalry in category:...................................................................18 3. Environment Factors.........................................................................18 a) Macro Environment:........................................................................19 1. Technological:...................................................................................19 2. Political:.............................................................................................19 3. Economic:..........................................................................................19 4. Social:................................................................................................19 a) Festivals and Religious occasions....................................................19 5. Legal:.................................................................................................19 b. Micro Environment:...........................................................................20 c. Internal Environment:........................................................................20 Scanning of Market Environment..........................................................21 iii) Company and Competitor Analysis......................................................22 Product Features Matrix........................................................................22 Gold Credit Card Features & Benefits.......................................................22 2. Objectives..........................................................................................24 3. Strategies..........................................................................................24 Marketing Mix........................................................................................25 Profits....................................................................................................27 3

Value Chain...........................................................................................27 For credit card industry, value chain can be described as follows: -.....27 Differential Advantage for each company in terms of...........................27 Ability to design new products..............................................................28 Ability to deliver the service..................................................................28 Ability to Market....................................................................................28 Ability to finance...................................................................................28 Ability to manage..................................................................................28 Expected future strategies....................................................................29 GAP ANALYSIS.......................................................................................29 iv) Customer Analysis...............................................................................31 1.) Segmentation ..................................................................................31 2) Consumer Behavior..........................................................................33 3) Targeting...........................................................................................34 4) Positioning.........................................................................................34 5) Assumptions in planning process........................................................36 1. Market Potential................................................................................36 2. Forecast Assumptions.......................................................................36

Section 2.................................................................37 Objectives................................................................37 Objectives:...............................................................38
Corporate Objectives ...............................................................................38 Divisional Objectives................................................................................38 Marketing objectives................................................................................38 Volumes & Profits..................................................................................38 Time frame............................................................................................38

Section 3.................................................................39 Strategy - Product....................................................39 c) Strategy - Product................................................40
Customer Targets.....................................................................................40 Competitor Targets...................................................................................40 Product/service features...........................................................................40 Core Strategy...........................................................................................40 Value proposition...................................................................................41 Product Positioning................................................................................41

Section 4.................................................................42 Strategy—Marketing Programmes...........................42 Strategy—Marketing Programmes...........................43
Integrated Marketing Communications Programmes...............................43 Pricing Strategy........................................................................................43 Channel Strategy......................................................................................44 Customer Management Strategy..............................................................45 Research...................................................................................................46 4

.....................................Section 5.....................48 Contingency Plans................................49 5 ...........................47 Controls.....................................................................................................................................................47 Controls.......................................................48 Marketing Metrics..................48 Financial Budgets..................................................................................

Section 1 Situation Analysis 6 .

all you need to do is to report the loss and ask for replacement or termination of the previous credit card. The Bank has three primary business segments: banking. credit cards come handy while travelling abroad. including commercial banking and treasury operations. This segment raises deposits from customers and makes loans and provides other services with the help of specialist product groups to such customers. the Bank operated 1. 2010. The retail banking segment serves retail customers through a branch network and other delivery channels. government bodies. MasterCard. and Diner’s club. they also reduce the risk of losing the cash. Credit cards not only cut the necessity of carrying cash (making our wallets lighter). In case your credit card is lost. wholesale banking and treasury.725 branches in 779 cities and 4. About Credit Card Credit cards are plastic cards with scan-able magnetic strips issued by a bank or business. Credit cards have now been loaded with a lot of attractive benefits to promote the plastic card culture in India. ii) Defining the product and Competitor 7 . Apart from being a luxury for some people. The wholesale banking segment provides loans. financial institutions and medium-scale enterprises. public sector units. The Bank is engaged in providing a range of banking and financial services. They are the most versatile form of retail lending. As of March 31. Common credit cards include Visa. The treasury segment includes net interest earnings on investments portfolio of the Bank.232 automated teller machines (ATMs).i) Introduction About HDFC HDFC Bank Limited (the Bank) is an India-based banking company. Convenience need:Credit cards can be used in emergencies when we run out of cash. non-fund facilities and transaction services to corporate. American Express. Need Safety need: Credit card is safer than carrying cash. Discover. which allow the credit card holder to purchase goods or services on credit.

Usage of the term "credit card" to imply a credit card account is a metonym. they find these cards suit their needs. It can be termed simply as the plastic money. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. This eliminated 8 . a) Magnetic Strip for Transaction: Credit card has magnetic strip encoding the account number which allows merchants to rapidly and accurately enter the account numbers into the verification terminal.In gist it’s a card with a cash limit preset to help the customer to meet his necessary requirements whenever and wherever even if he doesn’t have any type of cash component with him. The next step is to enter the amount through the key pad and to send the entire transaction electronically to the processor. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. So whenever the customers are looking to add their buying power conducting cashless shopping or budgeting their expenditure. Technical: A credit card is a small plastic card issued to users as a system of payment.

b) PIN Number for security c) CVV Number for Internet transactions d) Credit Limit: All banks have different limits set for customer depending upon the type of card in their possession. the first warning is given at the end of three months. with increase in competition. HDFC can be reached from any corner of world for reporting the loss. which is offered to the consumer for repaying the credit. Functional: a) Value Added Benefits: These include air line ticket booking and insurance benefits on lost luggage and accidental deaths. This depends on the gross income of the individual and the period for which he/she is using the card. customer carries zero liability on any fraudulent transaction on credit card. The latest in line of value added features are reward programs. and a black mark is put against the customer in case of non-payment more than 7 months further grace period is decided on a case to case basis.g. b) Cash withdrawal from ATMs 9 . After reporting the loss. f) Annual Charge: This is the fixed amount. In the Indian scenario. Therefore.5% on international ones. h) Lost Card Liability: If one is traveling and has lost his credit card. then reporting the loss will not be much of problem. 125 spent in India or Rs. Over the past few years. if ticket are charged to their cards. Here a card holder earns a certain number of points by spending a particular sum of money from their credit cards. uses a conversion of Rs. This is equivalent to around 24% .35% per year. which has to be paid every year irrespective of the extent of usage. a customer can end paying up heavily for the credit taken. 80 spent aboard for 1 point. g) Grace Period: This is the extra period. The interest chargers are also applicable on accrued interests. limits may vary depending upon the credit worthiness of the individual.cumbersome paper handling and rapidly improved the system ability to handle the increased transactions and reduce costs. a general decline in these charges can be observed. The interest rate generally ranges from 1. offers discounts of 3. e) Interest Charges: This is the biggest source of revenue for the issuing banks. Even within a particular type of card.99% to 3% per month. HDFC for e.5% on domestic airfares and 6. HDFC for e.g.

CVV Number for internet All Credit Cards. Value added Benefits Corporate Card Internet Banking Credit given by shop owners Technical Functional 10 .Credit card provides pleasure to avoid giving cash while paying bills of shopping. transactions charge cards etc. Defining Product Parameters HDFC Credit Card Competition 1. Pleasure: . retail d) Payment of bills e) Travel Tickets Booking Emotional: 1. Lost Card Liability All other forms of financial 1. PIN Number for security 3. Esteem: . and ticket bookings. Annual Charges 6. Interest Charges 7.Customer can purchase and do shopping without carrying cash on selected outlets. 5. retail Debit Card 4.c) Shopping – online. Credit Limit banks working in India. Shopping – online. Payment of bills Gift Card 5. Taking credit instruments for e. 2.g. Magnetic Strip containing customer IDs 2. Cash withdrawal from ATM Loans ATM Card 3.High end Credit card provides a Social Envy status. 3. debit cards. 2. dinner bills. Convenience: . Grace Period 8. of different 4.

Family member lender 4. 4. 3. Shopkeepers giving credit to customers 2. HDFC Platinum. Local Money lenders 3. Esteem Enjoy Satisfaction Convenience 1. 2. Gift Card Brand HDFC Gold. HDFC ICICI. SBI and others Titanium Define the competitor: Following are major competitors of HDFC in credit card industry in India: Public sector banks: SBI Bank of Baroda Canara Bank Punjab National Bank Private sector banks: Kotak Mahindra ICICI Bank Axis Bank Yes Bank Foreign banks: American Express Citibank HSBC Amex Barclays Bank Standard Chartered Deutsche Bank ABN Amro Local Money Lender Shopkeepers giving credit Competitors in terms of Product Gift plus cards Money Plus cards Cash Credits cards only for the Business Man Gold Loans 11 . HSBC.Emotional 1.

Mortgaged Loans Loan against securities. Debit Card .423. we compiled data directly from the RBI to track Debit Card Vs Credit Card spending habit by consumers in India. The following chart illustrates the comparison between Debit Card Spend Vs Credit Card Spend in India MoM for the Dec-2009 quarter.95 involving 4.34 cr transactions thus the Average ticket size of each Debit Card Transaction being Rs 1.66cr on Credit Card Plastic was done by 6.66 cr on Credit Card and Rs 7. Indians spent Rs 16. For the quarter ending DEC-2009.03 cr transactions thus making every transaction worthy of Rs 2.673. The spend on Debit Card was Rs 7.Vs Credit Card Transactions in India Just for the sake of comparison.723.95 cr on their debit cards.423.the spend of Rs 16. This was also the Quarter of Festival Season Shopping Season for consumers :-) Additional data reveals that .262. the spending has increased 12 . Though the Number of Credit Cards in circulation has gone down.262.

The number of credit cards has been increasing steadily from 1. Also. 13 . iii) Analysis of category 1. HDFC Bank leads the path way ahead of the competitor banks. 20 lac crore outstanding loan book. The below chart describe you the scenario in details. on an average. a) Size of the market: Credit card in India made their debut in the year 1981 and has witnessed an unprecedented boom in the recent years. 120 million cable connection and 600 million bank account holders. HDFC Bank captures nearly 36% of the credit card market share.which implies that Banks have been able to retain just the quality customer with long standing banking relationship. the size of credit card portfolio of the banking sector is around 2000 crores which is minuscule portion of the banking sector’s hour Rs. This means.5 million credit cards in 1995 to 5 million credit cards in 1999 to 12 million in 2004 and is expected to reach 35 million in 2011. credit cards come under the category of Asset section. Aggregate market factors In banking terms. This would mean a compound annual growth of 25-30% in number of credit cards. a credit card holder spends between Rs. 2000 to 2500 on a card in one month. This is against the 100 million mobile telephone subscriber.

which is running as a parallel economy with support from vested interests within the Government.23 cr [USD 13.00% HDFC BANK 36% SBI Bank 15.Other Banks 10. According to the consumer lifestyle survey.172. only 14% Indians own a credit card. In India. Debit Card Purchases saw big leap from USD 4.00% HSBC Bank 12.52 in FY 2008-09.The Average Credit Card Transaction was worthy of Rs 2676. The Average Debit Card Transaction was worthy of Rs 1553. Indian still transact a lot in Cash due to the failure on the part of successive Governments to encourage an ecosystem for e-money and curb black money.52 in FY2008-09.97] on Credit Cards and Rs 26. Most of the transaction was reported on VISA and MASTERCARD. Additionally. Data from RBI suggests us that .64 Bn in FY 2008-09.45 cr [ USD 5.54 up from Rs 2517. This is in sharp contrast to countries like UAE and Kuwait where 63% and 50% of respondents respectively own a credit card. The Total Plastics Card Market in India during the last Financial Year was USD 19. 14 .1 Bn in FY 2008-09 to USD 5.00% HDFC BANK ICICI Bank SBI Bank HSBC Bank Other Banks During the Last Financial Year .26 up from Rs 1453.00% ICICI Bank 27.81 Bn in FY2009-10. we wanted to know the size ticket of each of the transactions.81 Bn] using their Debit Cards.Apr-2009 to March-2010. 23% of Indians use their cards between 3-5 times and the remaining 5% use credit cards 6-10 times in a month. 72% of Indians use their credit cards 1-2 times (or less) during a month.872. Indians spent a total of Rs 62.78 Bn marginally up from USD 18.

00% 11.00% 2006 26.00% 12. are now bought through credit cards.00% 11.00% 14.00% 2009 36. GROWTH: RNCOS. spending pattern has changed drastically in India.00% 15.00% 14. both domestic and international.00% Stages in Product life cycle: Product life cycle continues for a period of customer life span but renewable upon every 3 – 5 years depending upon individual companies credit policies.00% 18.00% 9. Now people more frequently use plastic money (like credit and debit cards) for paying their day-today expenses. Utility payment is another segment where more payments are being made through plastic money since the last two years. 73% of Indians spend less than US$35. making it the largest category in traveling for credit card purchases. HDFC BANK ICICI Ba nk SBI Ba nk HSBC Ba nk CITI Ba nk Othe r Ba nks 2005 18. Airline tickets. while 25% spend between US$35 – 300.00% 26. the number of customers paying their electricity and water bills through credit cards has risen though the overall customer base is still small. Only 2% of Indians spend over US$300 on their credit cards every month. in the last few years.00% 8.00% 2.In terms of the average monthly spending on credit cards.00% 13.00% 12. changing spending pattern and surging trend of online shopping.00% 7.00% 2008 23. In the last two years. the Indian credit cards market is expected to grow at CAGR of nearly 28% by 2012-2013. Fuel accounts for a very small portion of credit card purchases as these are largely paid through debit cards.00% 6.00% 19.00% 11. “Global Credit Card Industry Emerging Markets”.00% 12.00% 14.00% 2010 38. As per the report.00% 13.00% 16. with the growing consumer spending.00% 12.00% 14. 15 .00% 14. Traveling. says in its new report.00% 2007 33.00% 12.00% 14. dining and jewelry are the top three purchases that Indians make through credit cards.00% 8.00% 16.00% 34.00% 11. a leading market research firm.

which rolled out its credit card business in the beginning of 2002. 16 .500 a month and the delinquency rate is less than the industry average of 7 per cent. has posted profits in this segment. smaller and many public banks prefer to issue co-branded cards or not enter the market at all. This is as simple as WHO DONT WANT EXTRA MONEY IN HIS POCKET. The credit card base of the late entrant new generation private bank stood around 8 lakh and the debit card base at around 22 lakh in the first half of the current fiscal. The card industry is growing at 40 per cent a year. The credit card business is highly capital intensive with banks having to invest around Rs 200 crore upfront to get the business running. Hence.($) Sales Profits Time Decline Product Development Stage Introduction Growth Maturity Losses/ Investments ($) Sales and Profits Over the Product’s Life From Inception to Demise Seasonality: This product is not at all seasonal because the product is sold throughout the year. the bank’s card portfolio grew at over 100 per cent. Spend per card for the bank is higher than the industry average of around Rs 1. Profits: HDFC Bank. Last year.

3. 7. Price sensitivity Power of channels of distribution 1. 5. Store loyalty 3. Dependence on existing channels 2. Agents 17 . Annual membership fees Joining fees Interest rate Grace period Credit limit Cash back and reward points Cash withdrawal Convenience of payments Ease of getting credit card End consumer power: 1. Buyer knowledge 3. 8.tegory Factors Porter’s five force analysis: - Threat of new entrants: Entry Barrier: 1. 4. 3. 5. 6. 4. 2. Brand switching 2. 9. 2. HDFC Bank Image Government Policies RBI Policies Economies of Scale Access to distribution channel Moderate Bargaining power of buyers: 1.

Buyer can identify same product satisfying same need 2. Environment Factors 18 . 5. Card Designer Technology Provider Database maintenance Supplying plastic Printing company VISA/MasterCard Moderate Pressures from substitutes: 1.HIGH Bargaining power of suppliers: 1. Advertising expenses by existing Company HIGH 3. Perceived value of substitute 3. 3. 6. 2. Ease of changing – free HIGH Current rivalry in category: The competition in credit card industry Number of competitors: .15 Demand for product category – Gold Category Degree of product differentiation – GOLD +. 4.

Legal: a) b) c) d) e) Regulators rule and regulations RBI guidelines Boards of Banks and FIs to closely monitor submission of data to CIBIL. b) Inflation: . c) Recession: . Consent to be obtained for all old and new loans. This would remove the need of carrying credit card with you. d) Consumer Spending Capacity 4. to avoid the legal litigation in future. Penalties could be imposed on banks for non-submission of data to CIBIL. Consumer spending would be less.During Recession. 3. 2.Some regions of India are politically unstable so banks would not issue credit cards in that regions. Credit Card Defaulters would increase.High inflation would affect consumers and they would spend less through credit cards. affects bank policies and schemes for credit card issues. Economic: a) Per Captia Income: . Region Instability: . Political: Tax and Government policies towards Credit Card Industry. Government legislations may shift Credit Card Industry to unprofitable level of risk. 19 . Technological: New Technologies are aggressing towards Contact less Payment with mobile handsets working as credit card. Social: a) Festivals and Religious occasions b) Credit Card Company Image in Society c) Drift towards Western Life Style 5.High Per Capita income would be an opportunity for industry.a) Macro Environment: 1.

f) Banks are warned against non disclosure of borrower accounts. 3. Financial Position HDFC has STRONG financial position. 2. Micro Environment: 1. Design Good: . 2010. b. 20 . Suppliers: a) Technology Service Provider b) Card Designer c) Master Card and Visa 2. Budget Good: . It has profit of 2948 crore for the year ended March 31. Internal Environment: 1.HDFC Bank has progressive budget for its credit cards business segment. Buyers: a) Credit Card holders of another bank 3. Competitors: a) New Players coming into market b) Another financial products of banks c) Other Credit Card Provider c.HDFC bank is providing cards with good aesthetic look.

No Control – HDFC is dependent on agencies Educate rural customers Credit Card with shopping schemes. HDFC can increase cash withdrawal limit S based on good transaction records Market to Corporate. Make product strong with suitable S advertisement and brand endorsement Generic Marketing needs to be done. 21 Demand Working Professional Tourism/Dinning Collaboration another banks Age Group with O T . Do transaction settlements fast.Scanning of Market Environment Parameter Product related Variable O/T How to address Tie up with Technology service providers S/ W W Latest Technology T services Smart Cards T Credit Card Debit Card cum O Issues credit card with customer information W (identification and customers. W W W S S S W S S S Functioning Knowledge of using T / use related Credit Card Data Quality Rural Market Shopping Dining Traveling T T O O O Utility Not Acceptability of T credit cards at small shops Safety O Convenience O Payment to Merchants Grace Period Emergency Withdrawal O O Cash O O O Company has good financial capability to S increase grace period. Credit card for people who are eating outside. W Different type of cards to various tourism W industries and hotels. Target different age groups’ needs and offer W credit cards. Do collaborations with local shop vendors Trusted Brand Easy to use. data storage) that can be used at for other purpose. Collaboration with other banks and other S financial institutions. Credit card for frequent travelers.

customers can redeem them for exciting gifts and services. 150. S Brand endorsed by role models Increase Visibility of product in market Educate customers and use for advertisements W W W Visibility O Acceptance by Low T and middle income Group High Social T Acceptance Marketing mix related Distribution Channel : O -Direct Selling Agents (DSA) Educate customers and use for use for W advertisements Wide network of DSAs W iii) Company and Competitor Analysis Product Features Matrix Gold Credit Card Features & Benefits Attractive Reward Points With effect from 1st July 2010 HDFC provides 1 Reward Point for every Rs. Customers could even convert them to airline miles with India's leading airlines through the My rewards programme. For incremental spends above Rs. including 110.000 per statement cycle.000 in a statement cycle.5 Reward Points per Rs. 10. 10. HDFC launched Corporate Card. 1.150 for spends up to Rs. Worldwide acceptance Accepted at over 23 million Merchant Establishments around the world.e. Rewards points redemption After earning all the reward points on HDFC Bank Gold Credit Card. 50% more Reward Points would be given to customers i.Style Acceptance Acceptance Working Professionals Acceptance Celebrities T by O by O Associate HDFC Credit Card Brand with W Style.000 22 .

which is 5% (subject to a minimum amount of Rs. Revolving credit facility Pay a minimum amount.Merchant Establishments in India. Zero liability on lost card If the customer loses the card.200) of customer’s total bill amount or any higher amount whichever is convenient and carry forward the balance to a better financial month.65% per month Intro Rate: 0. For this facility customer pays a nominal charge of just 3. he carries zero liability on any fraudulent transactions on his card.25% per month (39.95% per month Intro Rate: 0. HDFC Silver Credit HDFC Gold Credit HDFC Titanium Card Card Credit Card Isuuer Card Class Card Type Rewards Card Type Offered Interest Rate HDFC Bank Standard Classic HDFC Bank Gold Premium Lifestyle HDFC Bank Platinum/Titanium Premium Lifestyle MasterCard 2. children or parents. After reporting the loss.00% Intro Period: 1 months 23 .HDFC offers the facility of an add-on card for customer’s spouse. HDFC offers add-on cards to customers FREE OF COST.0% annually).00% Intro Period: 1 months MasterCard Visa 2. Interest free credit facility HDFC gives up to 50 days of interest free period from the date of purchase (subject to the submission of the charge by the Merchant). he can report it immediately to HDFC 24-hour call centre.95% per month 2. Free Add-on card One can share these wonderful features with one’s loved ones too .

300/-. HDFC wants to look for new segments for credit cards by which it can increase market share about 50% in next 5 years.000 and Rs 2.5% (Minimum Rs. whichever is higher A transaction fee of 2. b) Tie up with Medium scale Industries for Corporate Cards.00 0. /extended credit whichever is higher 300/-.As HDFC is offering Free for Life Credit card they are letting their annual fees go. Objectives Currently HDFC Credit Card has 36% market share with high margin of profits.00% per month Min.5% of amount 2. 3. whichever is higher 2.: Rs 100. 24 . As many competitors are entering into market and profit margin is decreasing. Cash Advance Limit 30% of credit limit Cash Advance Transaction Fee 40% of credit limit 2.: Rs 100. Strategies a) Removal of Insurance coverage: .00 Rs 700.00 Rs 2000.00% per month Intro Rate: 0.00 0.500 for HDFC Bank clients.00 Rs 500.00% Intro Period: 3 months Joining Fee Annual Fee Rs 300.Balance Rate Transfer 0.00% per month Min. c) EMI offered on purchases to be given on all credit cards.5% on amount withdrawn or Rs.00 The annual fee is Rs 3.5% on amount cash advances withdrawn or Rs 300 withdrawn or Rs. This loss is being made up with elimination of insurance covers and adding cash back facility to the credit cards as this feature which has hire visibility as value addition and less dissatisfaction of customers due to process of filing and settling insurance claims. 300) would be levied on the amount withdrawn and would be billed to the Cardmember in the next statement. Finance charges on 2. HDFC wants to maintain or increase its profitability for credit card business.

HDFC is offering credit card with: a) No Joining Fees b) No Annual Fees c) Incentives to retailers and agents PLACE: 25 . There are a number of possible pricing strategies. Varieties of credit cards are offered to customers: a) b) c) d) e) 2. Age Above 18 years Annual Income Greater than 120000 Geographical Location Metro. e) Women specific Credit Cards. income. semi urban locations. HDFC and other competitors are aiming for middle to high income groups. Marketing Mix PRODUCT: The business has to produce a product that people want to buy.d) Catalog based reward programs. They have to decide which ‘market segment’ they are aiming at – age. geographical location etc. Gold Card Silver Card Platinum Card Titanium Card Co branded Cards PRICE: The price must be high enough to cover costs and make a profit but low enough to attract customers.

Banks need to take into consideration the place factor as it decides the volume of business for them. The 2 important decision making areas are: • Making available the promised services to the ultimate users • Selecting a suitable place for bank branches HDFC Bank has 1. PEOPLE: HDFC is conscious in its potential in internal marketing . personal selling and telemarketing. in 779 cities in India. development. Internal marketing paves way for external marketing of services. HDFC also has 24x7 customer care support throughout the country. There has to be adherence to certain rules and principles in the banking operations. . Flow is as: a) b) c) d) e) 7.725 branches and over 4. PROMOTION: Promotion mix includes advertising. HDFC aims at providing and enabling favorable environment to foster growth and learning for their employees.the attraction. 5. publicity. 26 .the furniture. sales promotion. PROCESS: All the major activities of banks follow RBI guidelines. other tangibles. 4. HDFC understands the needs of customers and therefore it is leveraging technology to service customers quickly and conveniently. Standardization Customization Number of Steps Simplicity Customer Involvement PHYSICAL EVIDENCE: The physical evidences include the logo. motivation and retention of qualified employee-customers through need meeting jobproducts. 6. punch lines. employee’s dress code etc.232 ATMs. the reports. the layout of the branch. and all branches of the bank are linked on an online real-time basis.

2948 crore for the year ended March 31. value chain can be described as follows: Primary Activities: a) b) c) d) e) Service Design Knowledge Management Delivery Systems Management Moment of Truth Management Service Competition Management Support Activities: a) b) c) d) People Process Information Physical aspects Punctuality and Reliability Differential Advantage for each company in terms of 27 . 2010.Profits HDFC has STRONG financial position. Value Chain For credit card industry. It has profit of Rs.

Ability Players to Ability to Ability to Ability to Ability to desi deli Mar fina man gn ver ket nce age new the pro serv duct ice s HDFC Citibank ICICI Standard Chartered SBI HSBC Moderate High High Moderate Low Moderate High Very High Moderate Moderate Low High Moderate High Very High Moderate Moderate Low High Moderate High High High High Moderate Moderate Low Moderate Low High 28 .

Expected future strategies GAP ANALYSIS 29 .

Increase rural branches and educate the rural people. 30 To collaborate with other banks and other financial institutions. Incentive schemes to small shop owners depending on sales. Leverage its brand image as trusted brand. Country Vacations. Thomas Cook. Indian Railways etc.GAP Analysis Parameter Product related Variable Latest Technology services Smart Cards O/T T T S/ W W W S S S Functioning use related Credit Card cum O Debit Card / Knowledge of T using Credit Card Data Quality T Counter strategy Collaboration with Cell Phone Manufactures and latest technology service providers Credit cards to be provided with a chip having complete information about customers Launch a new credit card product with debit card features Educate the rural and semi urban people with different strategies. transactions settlement Rural Market T W Shopping O S Dining O S Traveling O S Not Acceptability T of credit cards at small shops Utility Safety O W S Convenience O S Payment Merchants Grace Period to O S O S Can utilize its financial strength to increase grace period for its selected customers. Introduce various type of cards for Emergency Cash O Withdrawal Demand Working O Professional Collaboration O with another banks Age Group O S S S S . Can utilize its financial strength to reduce withdrawal charges or introduce grace period for cash withdrawal from ATMs. Mahindra Club . Decrease period. Collaborate with travel agencies as Cox and Kings. Additional benefits to corporate customers. Develop internal capability for data collection. Increase collaboration with small shopping vendors. Increase collaboration with local and small food joints and chains. Search for new ways to provide convenience to customers.

) Segmentation Segmentation of Credit Card Industry: a) Demographic Customer Segments: The segmentation of the card industry can be done on the basis of income and on the basis of motivation towards a common set of needs and wants. whose income levels are significantly higher. of users 2. Income The segments which have been identified are as follows: (Source: NCAER) Segments Rich Consuming Class Climbers Aspirants Destitute According to NCAER reports: o The Rich (annual income over Rs 215.000/year) and Destitute (less than Rs 16.000) will grow to 120 million households by 2009-2010. as there is a very small percentage of India’s ‘rich’ who pay income tax and their income levels are correctly reported. o The number of households in the Aspirants (Rs 18.000-22.000-45.000/year) groups will decrease significantly.) 2. No.000 16. a case in point being the rise of software and IT enabled services.iv) Customer Analysis 1. tier-1 cities 31 Income Group (Rs. Customers are mainly between age from 25 to 55 years. Age: Currently. It is difficult to obtain correct estimates of this group.000 Less than 16.15.000 + 45. But there are large segments of people. Occupation: Currently.000-2.15. Metro.2 million households by 2009-2010 o The Consuming Class (annual income of Rs 45. main customers are salaried employees and business professionals.000-22.000 . The Indian market reflects considerable diversities in income levels and lifestyles. growing faster and spurring a consumer revolution. b) Geographic Customer Segments: 1. A World Bank estimate places average annual household incomes (in terms of purchasing power) at US $6452.000 22. 1.000-215.000) will increase to 9.

level of service is not very high. with the introduction of ‘Kisan’ Cards (The major issuing banks are: Dena Bank. 32 . HDFC can link house wives credit cards to their husband’s bank account or with add-on card facility. However. This is a new segment which is increasing day by day. Fee charges are not at all important for the ‘Rich’ but they assume a fair degree of importance as we move down the segments. The other segments have not been considered since they do not fall into the potential customer category. The motivational factor has been derived from the credit card holder behavior and income levels.Young generation is party lovers and number of occasions of parties is also increasing. service level. Party-hoppers: . b) Segmentation according to perceived utility of credit cards: Preliminary qualitative research by NCAER has identified certain motivators differentiated on the basis of the income segments. Vijaya Bank). • The growing number of netizens represents a segment with high-unrealized potential. Shoppers: . interest rate. these segments are also being brought into purview of credit card users (assumption: 65% of low-income households are associated with agriculture). State Bank of Indore. The residents of such cities are affluent and they are good markets for Credit cards. which are to be paid to the bank. Credit limit. level of service. In case of ‘Climbers’. 3. This shows differentiation as we move along the various segments. House wife: . convenience. c) Psychological Segments: 1. This low penetration is due to comparatively low acceptance of credit cards. In both the scenarios.Segments with high unrealized potential: • • Mid-Size cities in India have low credit card penetration. annual fees. charges. Punjab National Bank.Credit Card users have psychological feeling to use it for shopping purposes. level of service has very little motivation to offer. Rich farmers who live in the rural belt but also spend quite some time in the nearby towns can be tapped. Prestige. Prestige. Segments Rich Consuming Class Climbers Motivations: Convenience and acceptability.Housewives are a big segment. This segment primarily has either the non-premium cards or cards issued by the nationalized banks. 2. charges Charges include all commissions.

the features that are considered most important by customers in the case of credit cards in India are convenience.  84% believe that they are entitled to 30 days of free credit or more in all situations. FACTOR Convenience Acceptability Quality of Service Cash Advance / Credit Limit Annual Fees Special Privileges Interest Rate IMPORTANCE 66% 58% 52% 48% 42% 35% 25% 33 . A survey was conducted by credit card management consultancy (CCMC) of 10000 people who hold either a credit card or a charge card in 15 cities across India reveals the following facts:  78% were unaware of the difference between charge card and credit card  67% were unaware of the financial loss to be borne if they lost the card and that they would have to bear all expenses incurred on the card until the loss is reported. According to a survey conducted by ORG MARG in association with Business Today.  70% were unaware of the charge on outstation chouse  35% were unaware that bank charge an annual fee  Nearly 60% were unhappy with the credit limits offered on the card. 2. 5.  70% were unaware that outstanding balances are waived on the death of the card holder.2) Consumer Behavior To the extent that there are differences in behavior of the income groups. and the quality of service in that order.  70% were unaware of the action to pursue in case of loss of the card. Other features that are considered important are also given in following table: - (Importance of features of credit cards in India) S. this is applicable only in those cases where monthly bills are settled in full. acceptability. 6. In reality.No. lower income consumers may be more inclined to take the loan they are offered without question because they believe it is the only loan they will be offered. 1. 4. 7.  65% were unaware of the high interest rates charged on outstanding balances. 3.

Other reasons that are considered important are also given in following table: - S. Target customers of other banks having low market share. 6.No. 1.No. but also the middle income categories and project it as a need 34 . 3.At the same time the important reasons for purchase of a credit card are travel & entertainment followed by cash advance. 2. REASON Travel and Entertainment Cash Advance and Credit Limit Credit Period Emergency Services Special Privileges Status IMPORTANCE 56% 49% 38% 32% 28% 25% The various occasions where cards are used in India naturally flow from the reasons for purchase of cards. 1. 6. Hotels and Restaurants. Petrol Pumps IMPORTANCE 68% 56% 49% 41% 32% 29% 3) Targeting Following are the key segments areas where HDFC should target: a) b) c) d) Target affluent families in rural areas. 3. Hotels and Tickets Restaurants Clothes Store Provisions Store Consumer Durable – TV. Refrigerator. 5. Target SME segment with collaboration for corporate cards. Still the majority of card spending was on Travel. etc. 2. 4. 4. Target customers moving from low income group to middle income group. REASON Travel. 4) Positioning The positioning may be done so as to give an image that the cards can be acquired by people from not only the upper class. 5. Other occasions of credit card use are: S.

A positioning based on superior quality of service would create a favorable image in the mind of the consumer leading him to not only buy the card but also use also use it more often. This can be the main positioning plank because it would increase the credit card usage in each of the segments and hence exclusive cards can be introduced for the purpose the customers wants to or would benefit from using the card. traveling. it should give a mass appeal to the cards while reinforcing the dependable and trusting image of the issuing bank at the same time. However. Linking benefits to frequent use will help generate volume and will motivate consumers to use card even in circumstances they would not use it. In other words. hotels etc will certainly sustain competitive advantage if not increase it. Positioning on acceptability: Acceptability is the most important factor in the minds of the consumer and so positioning will help in retaining and acquiring more users. networking with big retailer. HDFC-HPCL co branded card for waiver on fuel surcharge etc.and a smart way to manage finances rather than being a debt trapper. shall lead to more card usage as the card would be handy for the customer to use whenever he wants to. airliners. Positioning on use: Credit cards in India are most often used while making expensive purchases. while giving weight to the above. This can be defined as prompt response in issuing the card. or Citibank-Shopper Stop card for discount and loyalty points on store purchases. Positioning based on benefits: Such a positioning has not been recommended as differentiation among credit cards fails to provide sustainable competitive advantage. as benefits offered on cards are easy to copy. This in turn. However. There is a limitation on the APR (annual percentage rate) being reduced beyond a certain point. This can be achieved through zero liability policy 35 . Example: Cobranded cards like 15% discount on airfare (on HDFC-Kingfisher co-branded card) for people who frequently travel. online shopping and utility payments. 24 hour customer service and quick complaint and grievance redressal. Positioning as a low cost card: This has previously been disregarded as an option as the costs involved are higher and one cannot gain by competing on price and advantages can be gained only on the basis of service and innovative product features. Positioning on quality of service: After convenience and acceptability of credit cards. we must also test this. the most important thing for customers is quality of service. The positioning should be such as to imply that the issuing bank’s credit cards are a part of the customer’s everyday life.

credit card issuers could position themselves as the best and safest medium for payment purposes by projecting them as users of advanced encryption technology especially in case of online transactions using secured socket layer technology and multiple security features for online use and otherwise which should be conveyed to the users in laymen terms. 2. Positioning on security: Positioning as a card for transactions on the net: With the impending boom in e-commerce in India.on fraudulent transactions. Forecast Assumptions Forecast for 4 to 5 years has been assumed on constant growth phase. For 2010. data has been approximated. ethical collections policy. 36 . Market Potential Latest data used in the report from 2003-2009. interest rate and all other hidden charges during the application stage itself so as to build a trustworthy brand and loyalty amongst card users. 5) Assumptions in planning process 1. complete and accurate disclosure of fee. And it is assumed that no external factors would hamper the growth of credit card industry in India.

Section 2 Objectives 37 .

b) To tap untapped market and untouched segments to increase market share from 36% at present to 50% present in the next 3 years. c) To provide high standard of services to all credit card customers. 2010. Each branch under each division would be assigned its individual branch target as per capita income of people of that region.725 branches in all over India. d) To provide continuous innovation for better customer services. Time frame Time frame for Marketing Division of HDFC bank is 3 years. Marketing objective is to launch “HDFC Rural Credit Card” successfully in at least 500 villages in its first year of operations. From its first year of operation to 5 years in future HDFC bank wants to capture 20-40% rural market in India. 2948 crore for the year ended March 31.Objectives: Corporate Objectives a) To maintain the number one position by providing customer delight. Divisional Objectives a) HDFC bank has 1. Marketing objectives Volumes & Profits HDFC Bank has profit of Rs. b) Each division would be assigned the task of increasing its customer base in rural branches. 38 .

Section 3 Strategy .Product 39 .

000 per annum.Product Customer Targets a. People having annual income between Rs. If the credit repayment discipline is found satisfactory. 2. b. Core Strategy 40 . c. There are some banks providing credit cards to lower to medium income group. But the interest rate would be slightly higher compared to if he makes the entire payment in one go. Though there are schemes such as ‘Kisan credit card’ by SBI and other microfinance companies providing micro-loans such as SKS Microfinance. Product/service features a. There are no credit card companies in the rural market space. All the employees of SMEs (Small and Medium enterprises) Competitor Targets d. 3.00.00. e.000 to Rs. Rural farmers who purchase seeds/ rice shellers/ farming equipments/ harvesters for their agricultural needs. Interest rates will be charged on reducing balance. b. the credit limit of the customer will be increased (based on the payment made by customer) so the customer can become eligible for higher cards.c) Strategy . The customer can make the credit card payment in installments. c. there are no banks who are offering rural credit cards to farmers. but penetration in this market is less right now.

c) SMB segment focused corporate credit cards with collaboration to SMB corporate houses. farmers are getting 2% cash back. In case of rural credit cards cost to maintain would be very less but benefits would be also be less in comparison to premium cards.Value proposition HDFC Credit Card Value Proposition: HDFC provides value proposition to its customers through: a) On tractors purchased through HDFC credit card. b) Income group having income less than 2 lacs per annum would get card of credit limit of 25000 with validity of 12 months. cost to maintain card would be higher but benefits would be much higher. For Titanium and Platinum cards. 41 . Product Positioning In a 2 dimensional perceptual map – two attributes would be “benefits v/s cost to maintain” the credit card.

Section 4 Strategy—Marketing Programmes 42 .

Selling by phone can be a communication strategy for bank if it uses for customers who want information about HDFC credit cards.Strategy—Marketing Programmes Integrated Marketing Communications Programmes e) Media Advertising: . Catalogs would show all features of credit card to customers. HDFC bank has many types of credit cards as Silver. New credit card category as Rural Credit Card would be priced at lower price or free to join for farmers to attract them. Each credit card would be priced on the basis of result HDFC bank would achieve from each credit card category. Television channel and Radio would be an ideal medium to educate farmers in rural area. 43 . Platinum and Titanium etc. It would also give a comparative study of all credit card categories of HDFC bank to its customers. Purpose of Integrated Marketing communication would be to make customer switch from Cognitive stage to Affective Stage to Behavioral Stage. Also. low income group and employees of SMB segment would be educated by mass advertisements. Radio and Magazines for advertisements of its new type of cards. Pricing strategy would be designed such that it simultaneously creates a customer’s incentive to buy that product and the HDFC bank incentive to sell that product. pricing would be decided on the basis of perceptions of rural population but price would be enough higher than costs to cover reasonable variations in sales volume. and Telemarketing etc. To penetrate into rural regions. Infomercials in form of short 5-10 minutes videos would be used to educate customers about HDFC credit card and how it is ahead from other credit cards. Pricing Strategy HDFC bank would use “Value based Pricing Strategy”. Catalogs. For Rural Credit card it would be “Psychological Pricing”. so that customer can choose a specific category which maps to his requirement. ii. Telemarketing. Newspaper.HDFC Bank would use Television. Measurement of all promotional strategies would be essential for HDFC bank so that it can measure effect of promotion spending on sales.HDFC Bank would use a number of direct marketing techniques as Infomercials. Gold. f) Direct Marketing: . i. consumer awareness and consumer purchase. iii.

Channel Strategy Channels Branch Banking Tele marketingDirect Selling Agents Internet Banking Retailers/Di stributors(F ertilizer. This will be used in combination with the branch banking strategy. though. The customers belonging to the PC segment are all computer literate. This will also cater to older. and it targets a very large segment of bank customers. They like the convenience and the time saved.oil companies Branch Banking: Pure bank retail customers & non customers who visit the branch in both rural and urban sectors. As manifested by the banks’ branch network. The advantages connected with this strategy are that all people with access to a telephone are potential customers and that it is less costly than the branch banking strategy. Tele Marketing: Because the telephone banking strategy has the telephone as it’s most important distribution channel. Thus.aut omobile. this is the distribution channel structure they are used to. non computer literate persons who value personal relationships. they have a modem and many of them are Internet users. the problem with this strategy is that it is expensive and likely to lead to a decreasing number of customers. The disadvantages. and this is where their competencies lie. 44 . Most of them have a credit card and do not value the personal interaction in a bank branch. It also relies on thoroughly tested and secure technology. it gives access to a large segment and a large geographical coverage without large-scale investments. However. Hence. It is suitable for delivering services based on face-to-face interaction. it relies on a more impersonal form of contact than the branch banking strategy. are that it has attracted the most price-sensitive customers and that this segment is likely to shrink. this has been the emergent strategy for most banks. Internet Banking: This segment is growing as it is providing convenience to the busy executives.

On one front. credit card division needs to actively convert inactive accounts. 1:1 CRM to assess the health of credit card portfolio. 1:1 CRM for Collections Off-the-shelf marketplace tools to determine which accounts to target and establish which payment offers or settlement offers to make because these accounts are otherwise unlikely to pay and/or destined to roll to charge-off.Tie ups with various retailers & distributors for distribution of co-branded cards. Settlement offers to accounts with 90 days of delinquency. e-mail and SMS (short message service) alerts to drive account activation. The Gray zone customers to be analyzed in more detail such as geography. (Spencer’s. address changes and check-writing history. retain customers at risk of churn and drive increased activity among loyal customers. demographics.Others. medical payments. job changes. stability and willingness to pay. Customer Management Strategy 1:1 CRM for Cardholder Acquisition: It is critical to keep the first step of the credit life cycle in place during times of crisis. automobile dealers. in order to maximize portfolio value. Behavioural modelling. accessing traditional data sources such as demographics and credit history. systems in place to closely monitor credit risk and address customers who are either showing signs of trouble or already at risk. Continuous “good customer” acquisition efforts are needed in order to maintain profitable customer accounts and begin the process of portfolio cleansing. plus other key information to assess the risk. metro cash and carry.Phone calls. On the other front. Rules-based campaign tools by assessing prospective cardholders’ ability. fee waivers or even one time settlements (OTS) if cardholders make statements on bankruptcy or financial hardship. notify customers approaching credit limits and remind customers with late-payment habits. To provide risk-management action—lower interest rate programs. Automated communications. shopper’s stop. 45 . as well as less traditional data like spending patterns and payment history will be used to drive improvements in risk assessment and the ability to predict churn. mortgage status. 1:1 CRM for Account Maintenance Account maintenance and collection avoidance. oil companies & fertilizer companies). Scoring of applicants to identify extremely qualified or unqualified applicants. personalized statement messages. Loan officers will review existing accounts (both active and inactive) and initiate contact with customers to update demographic information and determine overall loan health.

46 .Research Behaviour based predictive modelling by external specialists to identify future risks & targeting customers on their purchase habits.

Section 5 Controls 47 .

Controls Financial Budgets HDFC bank would allocate 20% of its total marketing budget to rural credit card marketing. Marketing Metrics Cost Per Acquisition (RS) CPA Average revenue per user(RS) ARPU Customer cancellation Rate-Churn(%) Churn Life time Value per customer (RS) LTV 48 . HDFC bank would spend money to educate rural people about its rural credit card.

2) Overwhelming acceptance by rural population OR Revenue exceeds projection A serious increase in revenues over projections will give HDFC Bank an opportunity to increase its marketing budget above the allocated budget. The danger in this scenario is that the first reaction to missed projections is to decrease spending. a plan. and it can't do that if it stops spending on marketing. HDFC Bank also needs to be ready for overwhelming success. HDFC bank has to get its message out to the target market.Contingency Plans This marketing plan is just that. The following are some of the possible scenarios: 1) Under-Acceptability by rural population OR Revenue misses projection If HDFC Bank misses its projections it may have to re-double our marketing efforts. particularly marketing expenses. 49 . Plans may not always work out and HDFC Bank should be ready to deal with the likelihood that HDFC rural credit card won’t be successful among rural population. HDFC bank should not do that.

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